Planet Money - We Buy A Superhero 4: Sellout

Episode Date: April 23, 2021

Two months ago, Planet Money got its own superhero. Today, we sell him out. | Find the full Planet Money Superhero series here.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Christmas Tree Christmas Tree here! Make a t-shirt and then file that shirt around the world as it gets made. We were Toxie's last owners. She was our pet toxic asset. A hundred barrels of crude oil. Three, two, one. We have ignition. Oh, whoa! Oh my gosh! This is Planet Money Studios from NPR.

Two months ago, we here at Planet Money acquired slash relaunched our very own superhero, a character called Microface. He had audio superpowers. There are three episodes all about this. If you haven't already listened, you should go back and listen right now. Now, what is exciting for us is that that was just phase one of our project. Phase two is where we get to learn how the big boys, your Marvels, your DCs, get to learn how the big boys, your Marvels, your DCs make a fortune by taking a silly drawing of somebody in tights and turning it into a billion dollars. And we're able to do this because we own our version of Microface. He is our property. And we've written a comic book about him. And we

have unlocked this magical business opportunity known as licensing. Licensing is probably the easiest way to make money off of your superhero. And like, think about Spider-Man. Spider-Man slippers and a backpack and pajamas. Now, Marvel did not make any of that stuff. They don't make pajamas in their pajama factory. No, no. The way it works is that people come to Marvel and say, hey, can we put Spider-Man on our pajamas? And Marvel says, pay us some money. And sure, that is licensing. to come to us. So you may remember we made an announcement in the very last podcast. If you make a product and want to slap a little microface on it, get in touch. And dozens and dozens of people actually did. And so we cleared our calendar for two straight days. We got one of those premium fancy Zoom accounts. And we asked virtually everybody who pitched an idea to sign up for a block of time. They would show up. They'd make their best pitch, we'd discuss the money,

and then we would decide right then and there, yes or no, do we have a Microface licensing deal? In essence, we were going to do Microface Shark Tank. Hello and welcome to Planet Money Shark Tank. Hello and welcome to Planet Money Shark Tank. Who are the sharks? They're economic podcasters trying to run a very small superhero empire. Kenny Malone is more protective of his superhero intellectual property. You don't love a brand, you live a brand. Robert Smith wants to strike while the iron is hot. The business of business is business. Today on the show, you will hear real Zoom negotiations between Planet Money hosts and entrepreneurs who want to license the micro-face character.

The discussions are tense. The money is real. And the podcasters are in over their heads. We were planning two straight days of Planet Money Shark Tank. We had to be in peak physical condition, eat right, get plenty of hydration, stretch. Yeah, okay, sure. But we also needed to do some bare minimum research on, you know, strategies for licensing maybe? Because it was clear to me that you can't just say yes to everything.

For example, it would be bad for the Microface brand if we let somebody put the character on, let's say, toilet paper. Sure, but what about a toilet seat? No. Yeah, no. Bathroom mat? Yeah. Nice. A towel? A towel you could do. See, where do you draw that line?

I say put Microface on anything that anyone wants us to. And I'd say that's clearly a bad idea. All right. I say put Microface on anything that anyone wants us to. And I'd say that's clearly a bad idea. We should be, I don't know, picky or curate the brand or I don't know something. And so we found someone who had thought through this toilet paper conundrum as head of licensing for some of the world's most beloved characters. OK, so I worked at Sesame Street. Sesame Street. And before this little show called Beavis and Butthead. Oh!

And it was a lot of fun, yeah. We like to think we're somewhere in between Elmo and Beavis and Butthead. I like that. That's a good mashup. Like, exactly halfway in between, I think. Maura Regan is now the president of Licensing International, which is the trade group for the global brand licensing industry. She is the licensor of all licensors. And Maura told us that every company she has ever worked with has had the same debate we are having.

What kinds of licensing agreements make sense? Oh, yeah, absolutely. Because people don't want to all of a sudden just feel that they're sort of throwing it out there and it's logo slapping or it's just... Wait, is that a technical term, logo slapping? It's a very technical term. Robert is a logo slapper. Now I know what to call Robert. Years on Sesame Street, we learned not to call people names, so I'm going to try not to use names. Mara says if you don't know which products are right for your character,

that just means you don't know enough about your character. You need to look at every licensing opportunity through a specific lens as a chance to expand that character's story, expand the world. What is his personality like? What is he like? Who are his friends?

What is he reading? What's his favorite food? So you want to really create these things because that'll also help you understand, oh, he would never do that. But Mari, in this business, do people talk about their characters like they're real people? Did you say like, well, Elmo wouldn't do that

and Elmo wouldn't stand for that? Absolutely. You need to be true to who those characters are. We spend a lot of time talking about, you know, what was in Elmo's toy box, for example. What are things that Elmo likes to play with? So what is in Microface's toy box? Which means that we need to look at every single potential, like, product-making partnership through Microface's photoelectric eyes.

We're going to call it the Elmo rule. And now that we have the Elmo rule, our way to assess licensing pitches, we've now scheduled the world's longest Zoom call, a.k.a. Planet Money Shark Tank. Are you ready? Someone's just going to pop in here? Yep. I'm going to let them in. Here we go. You ready? Okay. I'm ready. First into the tank is an entrepreneur from Omaha, Nebraska. Hello. Welcome to the micro tank.

It's not small. It's a regular-sized tank. We just all have microphones. That's true. That is true. Start off, introduce yourself, and tell us what you're here for. Sure. I'm Jonathan Texeret with Salt Pinch Creative Co., and I would love to license Micro Face for temporary tattoos. I love it. I have questions. Okay, let's do it. So give us your, what's your pitch here? Why do you want to do this? All right. So I mean, I think tattoos are cool, but you don't want to commit that much. And if we are talking about a superhero brought back to life,

I don't know if anybody is going to get like a real tattoo, but I'm sure we could get them covered in temporary tattoos. Here's how the business deal would work. NPR would pay him some flat rate, some amount of money. He'd get the microface tattoos made, and then we'd sell them in our store and keep all the profits. Money is not the question, though. The question is, do temporary tattoos pass the Elmo test?

On one hand, Microface does live in New York City. You know, he's a public radio reporter. He's cool. He has tattoos. He definitely has tattoos. Fine. But, like, temporary tattoos? Microface is a serious guy.

He's not a jokester. You're not going to see him at a carnival getting like a unicorn temporary tattoo on his cheek. I don't see this. Okay. Okay, fine. Does not pass the Elmo test. Jonathan, sorry. We were in no.

Have a great day, guys. All right. Take care. Bye. Lovely. All right. We got our next person. You ready?

Yeah. Okay. Here we go. Next into the tank is a Washington, D.C.-based recycling company. Why don't you introduce yourself and tell us what you're interested in? My name is Mario Ordoneta. My current enterprise focuses on recycling complex products. And Microface is an ideal spokesperson for me.

An ideal spokesperson, Mario says, because his company is called, wait for it, micro recycling. And even sent us a mock-up commercial with what Microface might be saying in the commercial. Saving the world from countless calamities makes me an okay person. But recycling the gold and cobalt from micro masks? Well, that makes me a hero. Thanks, micro recyclingcycling Systems. Clever. But again, the Elmo rule, Robert.

Micro faces day job, is a journalist, and he would never shill for a company. Like, endorsements are a blanket. No. I understand endorsement gets tricky. And thank you and good luck. I'm sure it's going to come out great. Thank you.

Bye-bye. Now, over about 10 hours of Zoom calls, we got pitched every idea that you could think of. We got video games pitched to us. Which were cool, but they required a little bit of investment from us. There was a pitch for Microface's face on a bag of coffee. Unfortunately, NPR already does coffee. There was, of course, a non-fungible token,

an NFT. Which Kenny just nixed. He hated it. Absolutely not. We are not selling into an NFT bubble. Look, look, I totally understand each and every decision, but after all this Shark Tank, I just kept thinking, can't we say yes once? All right. You ready for the next one? It's the last one of the day. Beyond. All right, here we go. Hello, Matt. Hello. Hello. Ooh, action figures. Wait, what's going on here? Let me just zoom in a little bit. What Matt was sitting in front of was a shelf full of exquisite, high-end superhero action figures.

But Matt was not here to pitch an action figure. That was just his personal collection. He was here to pitch something else. We have a small artisan cheese, wine, and beer making business. Can I share my screen? Sure, do it. With his PowerPoint, Matt Sutton explains that he helps run the Schnabel Tier Company out of Rochester, Indiana. And Matt wants to make Microface cheese. I think kind of our core cheese is Gouda. Listeners wouldn't be able to understand this, but while Matt's pitching, he's sharing his screen. And what we have are just glamour shots of cheese, like zooming in slowly over and over.

Here's the deal, Matt says. He's already got the Gouda. It's already made. So he's going to make a snazzy Microface label. And then when somebody buys Microface Gouda, like boom, our label goes on the cheese. He collects the money and then writes a check to NPR. We never have to touch the cheese.

And for every half-pound chunk of Gouda he sells, NPR will make 15%. $1.39. And we can make a label that is die-cut so that it forms the shape of a thing. I would never have thought of a cheese partnership. Where are you at on this, Robert? Where's your head? This is so awesome. Because first of all, cheese is amazing.

And secondly, as I conceive of the character of Microface, he's a young, hip, urban guy. When he does brunches, he likes to put out a section of a little soft cheese, a little hard cheese, and then something with flavor. I mean, a nice Gouda at brunch is a classy move, I will admit. Kenny, this is the one. This is the one.

Can I convince you to go along with us on this cheese journey? I guess. I can be convinced that we should do this. Sure, I think it'd be fun. Woo-hoo! Cheese! I can't believe this is happening.

All right. Thanks, Matt. Thank you so much. All right, bye-bye. Woo-hoo! Cheese! I can't believe this is happening. All right. Thanks, Matt. Thank you so much. All right. Bye-bye. Thanks, guys. All right. Bye. We got the cheese. You know, we could just end the podcast right now, as far as I'm concerned. But there was one more pitch that we wanted to talk about where maybe we were not the only sharks in the tank.

After the break, blood in the water. I'm a city boy, so I don't know much about making cheese, but I do know this. If you want a super cheese, you've got to start with super cows. Like this herd outside of Bourbon, Indiana. The happiest, most contented, nicest sounding cows in the nation. Great Gouda, look who's here. It's Microface. When I'm preparing for a classy brunch with my superhero friends, I always use Microface brand aged Gouda from our friends at Schnabel Tier. And let me tell you all about the Schnabel Tier factory. Every day at their beautiful facility, fresh milk gets turned into Gouda. The secret?

It's the recipe. Old recipes that we received from some of our European suppliers that, you know, we made some subtle tweaks. We added some flavors, but that's the big difference. This is exactly like our Microface project. We took an old recipe, an old character, and put our own tweaks on it. Absolutely. Yeah, that makes a lot of sense. You know what else makes a lot of sense? Buying dairy products from a podcast.

Because with Microface cheese, everyone can get a little taste of what it feels like to be a superhero. Even old Bessie here. One second, I'm going to put the micro mask on you. That's going to be a powerful cheese. Microface brand, aged Gouda from Schnabel tier. Available at npr.org slash microface. After two days of Shark Tank, we had seen it all, considered every opportunity, chosen wisely, and settled on Gouda. Gouda would be our way of exploring the world of product marketing and licensing. But right when we were about to wrap up the whole show, we got this one pitch, literally the last pitch we had on our schedule that really made us rethink everything we'd taken for granted about what

we were allowed to do with our Microface character. Yeah, it started out normal enough. I'm Dan Brazelton. And I'm Genevieve Brazelton. And we're the wife and husband team of the Bitter Housewife. And we're here to present an idea of licensing Microface for a canned beverage. Microface canned beverage. The Bitter Housewife company makes soda with cocktail bitters. No alcohol, no sugar. It's tasty. It is. They sent us some samples, which Robert and I are sipping as the Brazel Tins are pitching us their idea. They pull up this slide that shows a can of soda with a real label on it. It's a real photo.

And this is key. The label does not have a picture of our version of Microface on it. But what the label does have are the following words in Comic Sans font. Micro, face, bitters, and soda. And then the Brazel Tins of the Bitter Housewife Company try a move that we have not seen from anyone else in the pitch process. They explain that they have

already made these cans of soda that say Microface on them, and they've put them on their website. And we're already selling that, and we've sold it across state lines. Wait, you've already sold Microface bitters and soda? Yes, And we've sold it across state lines. Wait, you've already sold Microface Bitters and Soda? Yes. And we've sold it across state lines. To whom? To people who purchased it

on our website across state lines. We were flummoxed. They were already selling a Microface Soda. And why did they keep saying that weird thing about state lines? Like a lawyer was standing behind them, making them do it. They started to explain how that state lines thing was some part of a legal maneuver or something to invoke federal law. And we have begun the process with the U.S. Patent Office to trademark Microface Bitters and Soda as a beverage. So therefore, you kind of need to choose us because we're the owner. Wait, wait, wait, wait, what?

Are you allowed to do that? Yes. Is this a pitch or is this a shakedown? This is a legal warning. What's happening? We had no idea what was happening. Were they taking the name away from us? Were they saying that we can't sell beverages with the name Microface?

Do we have to pay them money? Like, what is happening? Clearly, we needed a lawyer. Jennifer, hello. What's up? Jennifer Jenkins, law professor, Duke University. She guided us through our original series on Microface. We're coming to you in a time of need. You're not being sued, are you? Not yet.

Now, I know you warned us about trademark in our first conversation. And we promptly ignored it because it was too complicated. I was like, let's talk about merchandising. I was like, let's talk about merchandising. We were like, whoa. Jennifer explains, maybe re-explains for a second time, that trademark is the area of law that you have to deal with when you start selling things. Trademark is about branding.

It's about labels. In the world of commerce, you can't own a word. But if that word becomes associated with a product, you can trademark it, which means you can own the specific use of a word on a specific kind of product. Here's an example. The company Nike is named after the Greek goddess of victory named Nike. Now, I'm allowed to talk about that goddess. Nobody owns her name. I can say Nike, Nike, Nike. I can say that all day long. I can even draw a picture of Nike, the goddess. She has wings, apparently. I could put that picture on a t-shirt and sell that t-shirt. But the moment I write her

name, Nike, under the picture on that t-shirt is the moment we have a big problem. Because the Nike Corporation has trademarked the word Nike and that little swoosh for use on apparel and for lots of other things. And so it would be confusing to customers if anyone else were allowed to write Nike on clothing. The point of trademark law is to prevent consumer confusion. So that when I see, you know, the Nike swoosh on a shirt or a pair of pants or shoes, I know that that's a Nike shirt. That is not some other company, right, that's putting the swoosh on their inferior product. So that's what trademark law is. Here is our situation with trademark.

We have created a comic book with the name Microface on the cover. We've sold these. We've even sold them across state lines. sold these. We've even sold them across state lines. And, you know, we can now make a great argument that we own the trademark to Microface for comic books. We have also been selling a lot of t-shirts and we have a great case to file for the Microface trademark for apparel. But, and this is very important, having a trademark on one kind of product, comic books, apparel, Having a trademark on one kind of product, comic books, apparel, this does not mean that it automatically applies to all products. So think about Dove, right? Dove Soap and Dove Chocolate are two different companies and they happily coexist. Delta Airlines, Delta Faucets, Delta Coffee Machines, Europeans know, right? Those are different companies.

They all call themselves Delta. They happily coexist. Those are different companies. They all call themselves Delta. They happily coexist. And so there are different companies that use the exact same mark in connection with different products. The Brazelton's of the Bitter Housewife Company claimed that they had beaten us to the microface beverages trademark, which, OK, fair enough. We had not even considered selling a microface soda beverage. The Brazelton's pitch was that we now had to partner with them if we wanted to make a soda.

We would help them market the soda. We would get a cut of the sales. But it really came down to either we have to work with the Brazelton's or we do not get to make a microface beverage at all. Bravo, Brazelton's. Bravo.

Checkmate. You win. Or, or maybe just check. Because what if a third option is this? We make our own soda. We put a picture of Microface on that label. We own that artwork after all. The Brazelton's don't own that.

And then we don't call it Microface anything. We just call it official planet money superhero soda. All words that the Brazelton's have not trademarked. Jennifer Jenkins says we should go for it. Yeah, make your soda, make it popular, make it delicious. People will love it. And, you know, their business may not get off the ground anyway, because frankly, my face is kind of a sh**ty name for a soda. Wait, what? Jennifer! It would admittedly be spite soda. We didn't want to make soda, but now we had to show the Brazelton's that we could.

We found another charming artisan soda maker to do it. My name is Andrew Anguiano, and I run Southside Craft Soda here in San Antonio, Texas. And what are you going to do for us, Andrew? We're going to make a soda out of spite. And lemons. And lemons. And lemons and sugar. And lemons. And lemons. And lemons and sugar.

Andrew says our Spite Soda will be a limited edition agua fresca inspired lemonade soda. It tastes best when served cold, just like revenge upon the Brazelton's of the Bitter Housewife Company. Hello there. I have a new setup, so can you hear me? You sound pretty good. Awesome. Okay. Kenny, you want to?

Yeah, I'd like to present our soda. As you can see on the mock-up of our label for our soda, we haven't actually said that this is microface soda or a beverage. No, it's planet money. We definitely own that trademark. Yeah. And our slogan, which may be commenting on something, but I don't know, who could ever say, would be sour, but never bitter. Love it. I think that this is excellent. And I think that you have a great contender there. I mean, obviously, if our microface bitter soda for reaping the bitter rewards of fighting crime. Hey, this isn't an ad. This isn't an ad for your soda. This is an ad for our soda.

So I think what we're saying is. Let the market decide. Let the market decide. And you, dear listener, are the market decide let the market decide and you dear listener are the market so it's up to you if you want to buy soda with the words micro face on it well whatever we we can't offer you that there are other people who might i'm not gonna google bitter housewife for you but if you want the fizziest soda with the perfect balance of sweet and sour, there's really only one choice. The official Planet Money superhero soda featuring the face of a superhero who really needs no introduction. Legally, we can't give him one.

The Microface store is back open. NPR.org slash Microface store is back open. npr.org slash microface. That's where you can buy our limited edition soda. And in case there was any confusion, the Microface Aged Gouda is a real thing. We personally tasted it and approved it, and it is great. It has a sharp, aged, rich flavor. It's delicious. Also available at npr.org slash microface.

Okay, so a quick update. The Microface comic book is written. It is now with the Illustrator, and we will be sending out some special updates to anybody who has pre-ordered the comic book. We received way more t-shirt orders than we expected, so if you're still waiting, we promise you will get it. And the NPR store is working on a way to ship internationally. I'm going to say it again, npr.org slash microface. Today's episode is produced by James Sneed, edited by Liza Yeager. Our senior producer is Alex Goldmark. Our editor is Bryant Herstadt. Special thanks to Gilly Moon, our engineer, Dan Gurma, and Maria Paz Gutierrez,

and Scott, the voice of Shark Tank Horsley. Special thanks also to everyone who pitched us licensing ideas who we couldn't get to in this episode. Thank you for trusting the Microface brand. This is NPR. I'm Robert Smith. And I'm Kenny Malone. Thanks for listening.

And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.